American Management Technology will increase sales by more that $9 million in three year’s time by focusing on the strengths of its key customers and the core values they need.
This business plan is the key to success. It renews the vision and strategic focus of our company: adding value in our local market to small businesses and high-end homeowners. It also provides a step by step plan to increase our sales, gross profit, and profitability. This year, we plan on borrowing another $100,000 to make these changes happen and improve our profitability. This amount seems to be within the limits of our balance sheet.
AMT is based on the idea that information technology management for business is similar to legal advice, accounting, and graphic arts. It is not a do it yourself job. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. These vendors must be trusted as well as their professional service providers. AMT strives to satisfy these needs, and become the premier provider of business information technology in its region.
AMT supplies both hardware and software to small businesses. We focus on small and medium-sized business and offer services and networks. The systems include both PC-based LAN systems and minicomputer server-based systems. Our services include design and installation of network systems, training, and support.
The following are our keys to success over three years to help us achieve our objectives:
- In order to distinguish yourself from other box-pushing or price-oriented businesses, offer and deliver support services and then charge for them.
- Increase gross margin to 30%
- Increase our non-hardware sales to 20% of the total sales by the third year.
AMT was started as a value added reseller (VAR) that provided consulting services. AMT became a reseller to supply personal computers to the market. AMT’s focus is on support and service to make it stand out from price-oriented competition.
We have one location, a 7,000 ft store in a suburban center conveniently located close to the downtown. It features a training area as well as a service area, offices, and a showroom.
AMT, a privately owned C corporation, is majority owned by Ralph Jones (founder and president). Six other investors, as well two employees and four former employees, are part of the six owners. Under the leadership of the president and four others, there are 21 employees. The main management areas are sales, marketing and service. The service department deals with service requests, support, development, training, as well as technical assistance. We are currently weakest in technical capabilities to manage databases marketing programs and upgraded service support, especially cross-platform. We also need to find a training manager.
Recent changes in computer reseller markets have negatively affected AMT. Margin squeezes as well as longer collection periods and lower inventory turnovers have all affected AMT. All these concerns are part a wider trend that affects computer resellers. The global margin squeeze is taking place in the computer industry.
We can only differentiate ourselves by clearly defining our vision for the company as an information technology partner for our clients. We cannot compete with companies that sell boxes or appliances as their products. We need to create an alliance that includes intangibles like trust, reliability and knowing that someone will help when you need it.
Our support services, with which we hope to capture market share will include such services as; training, upgrade offers, installation services, network configuration services, etc. Company will continue to pursue new opportunities.
AMT focuses on local markets, small business and home office, with special focus on the high-end home office and the 5-20 unit small business office.
According to the last study, retail sales were growing at 5% per annum while direct sales are growing at 25% and 30% respectively.
There are several different kinds of computer retailers within the industry including:
- Computer dealers are often limited to a small number of main brands of hardware and offer very little support and software.
Their support and service are not always very good, and their prices tend to be higher than those of larger stores.
None of these direct competitors provides the customization and service that small businesses such as our clients truly need.
Small business buyers are used to vendors visiting their offices. They expect the copy machine vendors, office products vendors, and office furniture vendors, as well as the local graphic artists, freelance writers, or whomever, to visit their office to make their sales. Many small businesses look to the superstores (office products, office supplies and electronic) or mail order for the best prices, but they may be missing out on a better deal at a lower price.
Businesses shouldn’t buy computers as “plug-in” appliances. They should be able to afford ongoing support, training, and service. Focus group sessions revealed that home office customers are not concerned about price. They would rather pay for quality service, if presented properly. Because they only see price, they think about it. Our data shows that many people would prefer to spend 10-20% more on a long-term relationship with a vendor that provides support, back-up, and quality service. This is why they end up in the “box-pusher” channels.
We still rely on newspaper advertisements to reach new buyers. We must change how we present ourselves as we adjust our strategies. We will refocus on our core message, which is service, through radio, cable TV sales brochures and newspaper ads. We must sell our company, not the products. We sell AMT, not Apple or IBM, Hewlett-Packard and Compaq.
Our ambitious sales forecast is summarized in the Yearly Total Sales Chart. Sales will increase from $5.3million last year to over $6 million next year and more than $9million in the last year.
- In the third year, sales grew to over $9 million
- Keep the gross margin at 30%.
- Selling $1.5 million worth of support, service, and training services by 1998
- By 1998, increase inventory turnover to six turns
Success keys 1.2
- You can differentiate yourself from other price-oriented, box-pushing businesses by offering service and support and charging for it.
- Increase gross margins to more than 30 percent
- Our non-hardware sales will increase to 20% by the end of the third year.
AMT was designed on the assumption of management of information technology for businesses being similar to accounting, legal advice and graphic arts. Business people need to look for reliable vendors that can provide quality support, hardware, software, and service. They must trust these vendors as much as their other professional service providers.
AMT is an example of such a vendor. AMT serves its clients as an ally and trusted friend. It provides them the benefits of both a business partner, and the economics of an external vendor. We ensure our clients have all the information they need in order to run their businesses with maximum efficiency, reliability, and effectiveness. We give our clients peace of mind because many of our information applications are critical.